CBOT ADDS FERTILIZER TO GROWING LIST OF FUTURES CONTRACTS

William B. Crawford JrCHICAGO TRIBUNE

In the last five years, the Chicago Board of Trade has launched 27 contracts in everything from 30-day interest rate futures to soybean meal options to index futures based on blue-chip Japanese stocks. In October, it plans to launch a fertilizer contract.

Like nearly three dozen other futures listed at the Board of Trade, the new contract will enable the product`s end users to hedge against adverse swings in the cash-market price of diammonium phosphate, a key ingredient in most fertilizers. It is assumed, of course, that speculators also will play a role, hoping to make quick profits by betting their money on the direction fertilizer prices will move.

The launch of a new contract at the Board of Trade, or the Chicago Mercantile Exchange for that matter, means the exchanges have invested a lot of money and time developing these products, and there are no guarantees they will be successful.

It is estimated that slightly less than half of the products introduced by the nation`s 11 futures exchanges are successful. Of the 27 products introduced at the CBOT since 1985, 13 have achieved open interest of 5,000, a mark that means the contract will be around for the long term.

For example, on Sept. 28, 1990, amid some fanfare, the CBOT launched TOPIX futures, an index contract based on the performance of about 1,100 blue- chip Japanese stocks. Through December, the index traded only 230 contracts and not one has traded this year, despite prelaunch statements by

international money managers that they needed such a vehicle to hedge their portfolio risk.

By contrast, the five-year Treasury note futures, which debuted May 20, 1988, traded a half million contracts for the balance of the year. Through the first six months of this year, it has traded 1.5 million contracts, putting to rest doubts of its staying power.

What makes a contract a success, or what makes it bomb like the TOPIX product, is something exchange leaders frequently puzzle over. Les Mouscher, a trader who heads the exchange`s new-product committee, suggests that many contracts turn into winners because they receive a fortuitous boost from an unexpected quarter.

Mouscher noted that the U.S. Treasury bond contract, the world`s most heavily traded interest rate contract, got off to a sluggish, rather unpromising start in the late `70s. But when the Federal Reserve under the Carter administration began tracking the money supply instead of interest rates in an abrupt policy switch, the contract, almost overnight, began a steady ascent. Last year, it accounted for nearly half the approximately 154 million total contracts traded at the exchange.

''The biggest fear with a new contract,'' said Gil Leistner, a soybean trader and co-architect of the exchange`s new swaps contract, ''is that a Roach Motel has been created; you find you are in a position and you cannot get out.''